Definition

Employment relation is established through a contract of employment and it shall be deemed formed where a person (the employee) agrees, directly or indirectly, to perform work for and under the authority of another (the employer) for a definite or indefinite period or piece work in return for wages. Let us try to examine the elements of this definition.

Agreement

The definitional elements of an employment contract indicate that agreement is the basis for employment relation and this automatically excludes forced labour from the ambit of employment relations. Hence a person cannot be compelled to enter into an employment relation. Thus in this sense it is a voluntary engagement.

Nevertheless, it is important to note that agreement to employment relation may be expressed directly or indirectly. For instance, a person may directly or personally negotiate with his/her employer and conclude a contract of employment thereafter. The other possibility is public/private employment agencies may serve as intermediaries between the employer and the employee with a view to facilitating their relations. Thus the agreement may be expressed personally or indirectly through employment agencies.

Performance of work

The other element under the definition is the agreement from the side of the employer is “to perform work for of the employer”. The employee will be required to render personal service. In this sense, the employee is committing him/her/self to render personal service for the benefit of the employer. Unlike a contract of sale where the seller delivers something tangible to the buyer, in the present case, the employee is making his service available (i.e. something intangible) to the benefit of the employer. Through this arrangement the employee is putting his skill and working capacity at the disposal of the employer. Although the employee may express his/her agreement indirectly, his/her service is to be provided personally. S/he cannot, as of right, delegate another person to render service in his/her behalf.

Under the authority of the employer

The employee will be required to render the said service within the frame work of the instruction of the employer. This in effect means the employer will possess the prerogative to direct, supervise and control the manner and performance of the employee. Consequently, the employer will have the power to determine what work to be done; when to be done; where to be done; how to be done and with whom to be done.

It is important to note, however, that the authority granted to the employer over the employee is not meant and intended to establish a master and servant relationship. On the contrary, it is within the framework of the terms of the contract that the scope of the authority of the employer over the employee will be determined.

Working under the authority of the employer differentiates an employee from an independent contractor. An independent contractor performs work for the benefit of his/her client but in performing such work s/he is not under the strict direction of the client. The client in such cases is interested on the result and not on the manner how the result was achieved. For example, if a client seeks the service of a tailor to make him a three pieces suit, he will not have an interest where and how it is made so long as the agreed date and quality of the product is maintained. But in case of an employer, he is not only interested on the result but also on the manner of arriving at such result. Therefore it is safe to conclude that where the “employer” has no or minimal authority over his “employee” the relationship between them is client-independent contractor relationship not employer-employee.

Length of employment

As regards to duration, a contract of employment could be entered into either for definite period (for six months, for one year etc), or for indefinite period (i.e. for the life of the company), or for a specific assignment (to unload sacks of grain from a truck). As we all know marriage, in principle, is a life long engagement. This is not the case for employment relation. There is no as such life long contract of employment.

Wage

Last but by no means is least; among the definitional elements is wage. As the employee is committing himself/herself to render personal service for the benefit and under the authority of the employer, the employer will have a corresponding duty to perform. It will be expected and required to pay wage to the employee. Hence employment relation is not a pro bono service. On the contrary, it is a service in return for wages.

The mode of payment for wage could be in cash or in kind though ordinarily payment is effected through cash. As regards to the interval of payment, it could be in daily, weekly, bi-monthly, monthly etc. basis or it could be assessed on piece rate. The manner or the mode of payment will not have any effect on the relationship of the parties.

From the above discussions, we tried to highlight the elements of a contract of employment. If and when these elements are cumulatively satisfied, the status of the parties will be held as employer and employee relationship.

(Extracts from an ILO document on “Employment relationship”)

The employment relationship: Overview of challenges and opportunities

The employment relationship is a legal notion widely used in countries around the world to refer to the relationship between a person called an “employee” (frequently referred to as a worker”) and an “employer” for whom the “employee” performs work under certain condition in return for remuneration. It is through the employment relationship, however defined, that reciprocal rights and obligation created between the employee and the employer. The employment relationship has been, and continuous to be, the main vehicle through which workers gains access to the right and benefit associated with employment in the area of labour law and social security. It is the key point of reference for determining the nature and extent of the employers’ rights and obligations towards their workers.

The profound changes occurring in the world of work, and particularly in the labour market, have given rise to new forms of relationship which do not always fit within the parameters of the employment relationship. While this has increased flexibility in the labour market, it has also led to a growing number of workers whose employment status is unclear and who are consequently outside the scope of the protection normally associated with an employment relationship. In 2004, the Director-General of the International Labour Office described  the challenge as follows:

The state has a key role to play in creating an enabling institutional framework to balance the need for flexibility for enterprise and security for the workers in meeting the changing demands of a global economy … At the heart of  national policies to meet the social challenges of globalization is a dynamic strategy for managing labour market change.

The legal framework governing the employment relationship is an important component of national policy for managing labour market change taking account of the need for flexibility and security.

The question of the employment relationship has, in one form or another, been on the agenda of the International Conference for over a decade. The following is an overview of the evolution of these discussions culminating in general on discussions in 2003. This chapter also summarize the most  pertinent issues in the national studies conducted in 1999-2001, which formed the basis of report prepared by the Office for the 2003 general discussion and which are comprehensively analyzed and referenced in that report.

Evolution of the discussion at the ILO on the employment relationship

The ILO has taken the employment relationship as the reference point for examining various types of work relationship. In recent years, the Conference has held discussion on self- employed workers, migrant workers, home workers, private employment agency workers, child workers, workers in cooperative and workers in the informal economy and in the fishing sector. It has also addressed work relationships in the course of discussion on social security and maternity protection.

In 1997 and 1998, the Conference examined an item on “contract labour”. The original intention of the Conference discussion on “contract labour” was to protect certain categories of unprotected workers through the adoption of a Convention and a Recommendation, but the proposal to adopt a Convention and a Recommendation failed.

However, at the end of the second discussion in 1998, the Conference adopted a resolution in which it invited the Governing Body of the ILO to place the issue on the agenda of a future session of the Conference with a view to the possible adoption of a Convention supplemented by a Recommendation if such adoption was, according to the normal procedures, considered necessary by that Conference. The Governing Body was also invited to instruct the Director-General:

To hold meetings of experts to examine at least the following issues arising out of the deliberation of the Committee on Contract Labour:

which workers, in the situation that have began to be identified in the Committee, are in need of protection;

appropriate ways in which such workers can be protected, and the possibility of dealing separately with the various situations;

how such workers would be defined, bearing in mind the different legal systems that exist and language  differences.

It is noteworthy that in the various debates mentioned above, delegates from all regions repeatedly alluded to the employment relationship, in its various forms and with different meaning, as a concept familiar to all.

In accordance with the 1998 resolution, a tripartite Meeting of Experts on Workers in situations needing protection was held in Geneva in May 2000. The common statement adopted by the Meeting noted that the global phenomenon of transformation in the nature of work had resulted in situations in which the legal scope of the employment relationship (which determines whether or not workers entitled to be protected by labour legislation) did not accord with the realities of working relationships. This had resulted in a tendency whereby workers who should be protected by labour and employment law were not receiving that protection in fact or law. The scope of regulation of the employment relationship did not accord with reality, which varied from country to country, and within countries, from sector to sector. It was also evident that while some countries had responded by adjusting the scope of the legal regulation of the employment relationship, this had not occurred in all countries.

The common statement also noted that various country studies had greatly increased the pool of available information concerning the employment relationship and the extent to which dependent workers had ceased to be protected by labour and employment legislation. The meeting agreed that all countries should adopt or continue national policy in terms of which they would, at appropriate intervals review and, if appropriate, clarify or adapt the scope of the regulation in line with current employment realities. The review should be conducted in a transparent manner with participation by social partners. The experts further agreed that ILO could play a major role in assisting countries to develop policies to ensure that laws regulating the employment relationship cover workers needing protection.

Further to the resolution adopted by the Conference in 1998, the Office undertook a series of national studies. The objective of the national studies  was to help identify and describe the principal situations in which workers lacked adequate protection, as well as the problems caused by the absence or inadequacy  of protection, and to suggest measures to remedy such situations.

The research undertaken confirmed the universal importance of the idea of the employment relationship, on which labour protection systems are largely based, while highlighting the deficiencies affecting the scope, in terms of persons covered, of the regulations governing this relationship. It also confirmed the extent and repercussions of the problems of lack of workers’ protection.

At the 91^st Session of the Conference in June 2003, a general discussion was held on the scope of employment relationship. During the discussion, many delegates emphasized that the concept of the employment relationship is common to all legal systems and traditions. There are rights and entitlements which exist under labour laws, regulations and collective agreements and which are specific to or linked to workers who work within the framework of an employment relationship. One of the consequences associated with changes in the structure of the labour market, the organization of work and the deficient application of the law is the growing phenomenon of workers who in fact employees but find themselves without the protection of an employment relationship. There was a shared concern among governments, employers and workers to ensure that labour laws and regulations are applied to those who are  in employment relationships and that the wide variety of arrangements under which work is performed by a worker can be put within an appropriate legal framework.

The Conference also recognized that the protection of workers is at the heart of the ILO’s mandate. Within the framework of the ILO’s Decent Work Agenda, all workers, regardless of employment status, should work in conditions of decency and dignity.

The Conference noted that the ILO should envisage the adoption of an international response on this topic. A Recommendation was considered as an appropriate response. The Recommendation should focus on disguised employment relationships and on the need for mechanisms to ensure that persons with an employment relationship have access to the protection they are due at the national level. Such a Recommendation should provide guidance to member states without defining universally the substance of the employment relationship. The Recommendation should be flexible enough to take account of different economic, social, legal and industrial relations traditions and address the gender dimension. Such a Recommendation should not interfere with genuine commercial and independent contracting arrangements. It should promote collective bargaining and social dialogue as a means of finding solutions to the problem at national level and should take into account recent developments in employment relationships.